
No relief for city rentals
BY MICK ROBERTS
The overall picture remains grim for city renters, if the latest vacancy statistics released by the Real Estate Institute of NSW are any indication.
Sydney recorded a slight improvement of 0.2 per cent in June, driven largely by a half per cent rise in rental vacancies in the inner-city.
The Housing Industry Association says the lack of affordable housing is locking Generation Y out of the housing market, contributing to many ’20 somethings’ unable to afford the city’s skyrocketing rents.
‘If you’re in your 20s, on a low to middle income, and looking to buy a home, it’s becoming virtually impossible,’ Housing Industry Association chief economist Harley Dale said.
Figures show the proportion of Gen Y’s – born between 1976 and 1991 (aged 17 to 32) – who live at home has increased across Australia in recent years, hitting over 50 per cent in 2006.
Confirming the anecdotal evidence that has been emerging for some time, the 25-29 year old age group is remaining at home in higher rates than in the 1980s. Nearly one in five 25 to 29 year olds still lives at home.
Rental vacancies in a 10 kilometre radius of the inner-city stood at 1.2 per cent in January, falling to 0.9 per cent in May and registering in at 1.1 per cent in June.
Treasurer Wayne Swan and minister for housing Tanya Plibersek launched the National Rental Affordability Scheme late last month.
Under the scheme, the Federal Government has combined with the state governments to offer incentives to institutional investors to build 50,000 new rental properties, which will be rented out at 20 per cent below the market rate.
Low vacancy rates and strong demand for housing have driven rents higher across all the capital cities. Rents increased by 2.2 per cent in the last quarter, the largest rise since 1989.
Tanya Plibersek said rental vacancy rates are below 2 per cent in most capital cities.
‘The National Rental Affordability Scheme will increase the supply of affordable housing and reduce rental costs for many low and moderate income households,” Ms Plibersek said.
Also responding to the housing crisis, the State Government has announced a proposal to relax planning laws to allow backyard granny flats.
NSW Premier Morris Iemma said secondary dwellings built in Sydney will help ease the rental crisis.
Mr Iemma said his government will talk with local councils, and the building industry, while also lobbying the federal government to scrap capital gains tax on privately-rented secondary dwellings.
Under the plan, dwellings could not be sold individually, but could be rented, allowing property owners to gain extra income, while relieving the rental market.
Mr Iemma said more secondary dwellings would provide immediate relief in Sydney’s tight rental market.
Meanwhile, the Salvation Army says the city’s rental crisis is placing enormous pressure on its welfare services.
Spokesman Pat Daley said the Salvos are providing welfare assistance to a new type of client labelled ‘the working poor’.
‘We have never been presented with this type of crisis before,’ he said.
‘These working poor clients come from the middle class structure of society,’ he said.
Mr Daley said the Salvation Army is expecting a busy Christmas, providing emergency food vouchers and shelter to those struggling to meet high rents and interest rates.
‘There is also increasing domestic violence due to the financial stress in these families. Many of them lead to eviction, from their homes because they cannot pay their rents. Some are drug dependent”
President of the Real Estate Institute of NSW, Steve Martin, said rental vacancies are firmly entrenched in the low, single digit vacancy rates.
‘Every week that the NSW Government avoids making a decision to remove land tax and stamp duty is another week that an additional 1400 people arrive on Sydney’s doorstep looking for a home,’ Mr Martin said.
‘There is only so much slack before the rental accommodation rubber band is going to snap.’